TELCO GROUPS SUGGEST NEW WAY FORWARD FOR UFB BILL The telecommunications and industry group opposed to the UFB Bill is suggesting ‘win-win’ alternatives to their concerns around a regulatory holiday for successful fibre bidders and loss of Commerce Commission oversight to UFB prices and services.

The group including Call Plus, Kordia/Orcon, TelstraClear, Vodafone, 2 Degrees, Opto Network, Torotoro Waea, Federated Farmers, Consumer New Zealand, TUANZ, and Internet NZ, last week sent a letter to all MPs outlining their concerns around the Bill.

TUANZ Chief Executive Paul Brislen says a letter from the group sent this week to Craig Foss, the chairperson of the Select Committee, considering UFB initiatives contained in the Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill, outlines possible solutions to the group’s concerns with the Bill.

The group fully supports broadband infrastructure investment, and while group members have a range of serious concerns with the Bill as it currently stands, their focus is on working with Government to find a solution.

Brislen says the letter sets out an alternative to a regulatory holiday and brings the Commerce Commission back into the picture, while also providing certainty to lines fibre companies and access seekers.

The model for the alternative plan is the ‘Special Access Undertaking’ (SAU) approach successfully introduced to the Australian telecommunications regulatory regime in 2002.

“Regulatory certainty could be provided to access providers by ensuring an approved SAU prevailed over any subsequent attempt to regulate prices,” Brislen says.

“At the same time, regulatory oversight of prices could be maintained by allowing the Commerce Commission to review and approve price terms in a SAU,” he says.

“Hopefully, in this way we can reach a situation where everyone committed to protecting New Zealand consumers and ensuring the country moves forward in the digital age is satisfied, and at the same time New Zealand’s competitive environment is preserved.”

Reports that Communications Minister Steven Joyce has ‘rejected a compromise put forward by the Telecommunications Users Association over Government’s broadband policy’ belie his claim of being open to suggestions to improve ultra-fast broadband (UFB) regulation, says Allan Freeth, CEO of TelstraClear.

“The minister’s flippant rejection of the mechanism of special access undertaking, highly successful as a price guarantee mechanism in Australia, is testament to the fact he is hell-bent on building a state-funded and protected UFB monopoly.

“He tossed it aside without a second glance, refusing to even discuss how the stakeholders could advance the proposal to deal with his stated concerns.

“This is consistent with his lack of interest in working with me or other industry and consumer players. Repeated offers of meetings and compromise are acknowledged by his office and then ignored.

“If Mr Reynolds and his team at Telecom win the Crown fibre process to build the bulk of the UFB network and this legislation is unchanged, then I believe they will have achieved an outcome far exceeding his shareholders’ dreams: the reestablishment of the Telecom infrastructure monopoly of old. In this case, I graciously salute my competitor’s cleverness and skill at achieving such a coup.

“Specifically, in relation to the special access undertaking proposal, the Minister is again being misleading in saying price certainty won’t be achieved and it will delay the UFB build. There are ways in which a special access mechanism could be established within the Government’s timeframe and would not affect its vision and would, indeed, help achieve it.

“I call upon the Minister to be honest and, if he has no intention of changing anything in relation to the regulation, he should stop misleading consumer groups and industry stakeholders and wasting our time.”

The minister should balance the arguments for price stability with the fact that costs will not be stable. Labour costs may go up or down depending on what cable laying technology is approved in each area, but the actual fibre and electronics would be expected to come down over the timeframe of the rollout. With the ComCom's switch to a cost-plus model for Telecom's wholesale broadband, regulatory risk shouldn't be a UFB risk factor anymore.

Qualified in business, certified in fibre, stuck in copper, have to keep going ^_^

Which is exactly why CFH set's the price CAPS for the LFC, Basiclly the crown is saying here's this money, here's what we expect you to do and this is the price we expect you to charge retailers AT MOST.

Nobody in the gang of 11 has actually said WHY the comcom needs to be invovled, both comcom and CFH are governments entities, CFH sets the terms so why does comcom need to be involved at all? Is comcom really going to rule against another govertment government entity? If it's the LFC thats acting up then CFH can have a chat with them about the extensive contract they signed. As long as the CFH-LFC contracts are made public then their shouldn't be any need for doubling up the on the red tape, It's already taking long enough to get the LFC-RSP contract sorted out

Most problems are the result of previous solutions...

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An update received from the Hon Steven Joyce, Minister for Communications and Information Technology:

Regulatory forbearance to be replaced

Regulatory forbearance on wholesale prices for the ultra-fast broadband network will be replaced with contractual mechanisms that would apply if the Commerce Commission regulates prices lower than those contracted, Communications and Information Technology Minister Steven Joyce announced today.

In announcing the move, Mr Joyce says that he had listened carefully to industry concerns in regards to the plan for regulatory forbearance over the 8 ½ year build period of the contract.

“While I think their concerns are more theoretical than real, given that pretty much everybody has been happy with the very competitive prices announced by CFH to date, we have been able to find an alternative solution which will give the infrastructure builders confidence to stay committed to their low capped prices, and customers confidence that they are will continue to get the best prices over that 8½ year period.”

Mr Joyce said investors contractual mechanisms would be triggered if significant changes are made to price or other key features of the UFB regime over the build period.

“Any such remedies would remain within the current government funding of $1.35 Billion. They could be in the form of additional deferred repayment to the government of the funding. These remedies are similar to those provided in other public-private partnerships.

“In making this change the government is backing the prices negotiated by CFH, however, if the Commerce Commission believes prices should go lower at some point over the build period, government wears the risk not consumers.

The contractual mechanisms would not apply where there was behaviour by Local Fibre Companies which resulted in regulatory change.

The Government will also include an “avoidance of doubt” clause in the purpose statement of the Telecommunications Act 2001, and write a Government Policy Statement, which together will make it more explicit that the Commerce Commission and the Minister must consider investment and innovation in new markets when considering price regulation.

Mr Joyce says amendments to remove regulatory forbearance from the Telecommunications Amendment Bill and make the related changes will be introduced at the final legislative stages of the bill.

While the Commerce Commission’s normal role under the proposed Act will now apply, the restriction on unbundling of the UFB network to residential customers will remain until 1 January 2020, after which unbundling can occur.

The Minister thanked the Maori Party for their representations and assistance in developing the change.

"The Maori Party has taken a consistently positive view of the importance of Ultra-fast Broadband and the Rural Broadband initiative in lifting economic development for Maori and all New Zealanders. They are taking a constructive approach to what will be a transforming investment for New Zealand.

“I also welcome the Finance and Expenditure Committee’s amendment to bring the general review of the telecommunications regime forward to 2016 to provide earlier certainty about the form of regulatory regime that may replace the current one.

“This package of measures together will provide additional certainty for bidders but also retain additional aspects of the current telecommunications regime that some stakeholders have been concerned about changing,” says Mr Joyce.

Its a protection against ComCom doing something random, not supposed to subsidise actual abuse of the LFCs' monopolies. Seems a good balance overall, at least until we see what new problems it creates. Would have been less chance of unforeseen side effects if this had been proposed early enough to generate industry feedback.

Qualified in business, certified in fibre, stuck in copper, have to keep going ^_^

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